MARKET REPORT July
11, 2014
The Markets saw an extremely volatile session yesterday as
the NIFTY, while reacting to the Union Budget, moved nearly 300-odd points on
either side before it ended with minor losses. The Markets opened on a flat
note and move in absolutely sideways manner while it awaited budget
announcements. The Markets thereafter saw a sharp dip wherein it went on to
form the day’s low of 7479.05 by afternoon trade. However, after this the
Markets saw a huge spate of short covering form lower levels. The Markets not
only recovered all of its losses but went on to trade in positive territory by
extending robust gains and forming day’s high of 7731.05. Just when it seemed
that the Markets may end the day with very robust gains, all of their gains
were pared again and the Markets traded negative. It finally ended the day at
7567.75, posting a net loss of 17.25 points or 0.23% while forming a higher top
and sharply higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The Markets have put themselves at a very interesting
juncture yesterday. After reacting to the Union Budget which remained almost an
non-event apart from minor takeaways, the Markets saw a huge 300-odd points
movements on either side yesterday. Since it ended the day yesterday near the
low point of the day, the levels of 7700 have held out as immediate top. The
Markets are expected again to open on a modestly positive note but there are
chances that it drifts again towards the lower end of the trading channel.
While maintaining the levels of 7700 as its immediate top,
the supports for the Markets come in at 7500 and then at 7415 levels.
The lead indicators too continue to paint a bearish picture
for the Markets. The RSI—Relative Strength Index on the Daily Chart is 51.6403
and it has reached its lowest value in last 14-days which is bearish. Further,
the RSI has made a new 14-day low
whereas NIFTY has not yet and this is a clear Bearish Divergence. The Daily
MACD continues to remain bearish as it trades below its signal line.
On the derivative front, the figures too have been little
interesting. Even after such a big move on either side, the NIFTY July futures
have added just 13,100 shares or a very nominal 0.10% in Open Interest. Even
after such wild swings in the Markets the Markets nearly did not saw any
offloading on EOD basis not did it see any addition of shorts when it pared
nearly 200-odd points again from its intraday high.
Going by the pattern analysis as well, the Markets are at a
critical juncture. The way the Markets have formed and confirmed the immediate
top at 7700 levels, on the same lines, it has not yet breached the levels of
7500 as well to give a breakdown. As of today, the Markets have not given any
structural breach on the Daily Charts. The weakness shall creep in further if
the Markets slips below this critical support of 7500.
All and all, one thing stands clear that the Budget did not
bring immediate cheer to the Markets and therefore the level of 7700 remains a immediate
top. There are chances that after a modestly positive opening today, we might
again test the 7500 levels. In any case we strictly advice against making any fresh
purchases until the directional bias is clear. While remaining very light on
exposures, adequate liquidity should be continued to be maintained while
adopting a crucial approach on the Markets today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
